HMRC interrogates 12,000 over Covid scheme fraudby
HMRC has conducted more than 12,000 investigations into the use of coronavirus support schemes, including the furlough scheme and the self-employed income support scheme.
The tax authority has revealed that thousands of businesses are under investigation for coronavirus fraud following a freedom of information (FOI) request from the law firm BLM.
The 12,000 probes into the misuse of the furlough, SEISS and Eat Out To Help Out schemes cover the period up to the end of March. The investigations are triggered when HMRC suspects error and fraudulent risks for each of the schemes.
The coronavirus job retention scheme was the biggest target for fraud, with HMRC undertaking 7,384 compliance interventions. These interventions have so far led to five arrests. Meanwhile HMRC had opened 5,020 investigations into SEISS by the end of March, with no arrests as of 28 March. The Eat Out to Help Out scheme had the fewest with 424 investigations and three arrests.
The thousands of potentially fraudulent claims do not include cases where coronavirus fraud or infringements form only a minor aspect of the case.
“When taking the various other recovery schemes aimed at businesses into account, such as the Bounce Back Loans (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS), it is not unreasonable to suggest that we are talking about losses in the billions through fraudulent activity.” said Iskander Fernandez, partner at BLM.
“As it takes time for HMRC to build a case, it’s unlikely that we’ll see an immediate wave of arrests and prosecutions. However, it’s a case of when, rather than if, given that thousands of interventions are currently underway.”
An increase in compliance investigations
The number of compliance investigations are more than likely to rise, and have already substantially increased since BLM’s FOI request.
On a recent episode of AccountingWEB Live’s Tax Talk, Kate Upcraft said that there are “at least 20,000 plus investigations going on at the moment”.
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